Indonesia’s June Annual Inflation Rate Slows to 3.12%

1 min readUpdated May 24, 2025Jul 4, 20188:46 AM

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Indonesia’s annual inflation rate slowed less than expected in June from a year ago and stayed within Bank Indonesia’s target range, the Central Statistics Agency said on Monday (02/07).

June’s annual inflation rate came in at 3.12 percent, compared with May’s 3.23 percent. Analysts surveyed by Reuters had expected a rate of 2.88 percent.

Suhariyanto, the head of the statistics bureau, said the consumer price index rose 0.59 percent on a monthly basis in June, due to rising demand during the Muslim fasting month.

However, the annual rate fell because of the base effect of high prices during last year’s Ramadan, he said.

The annual core inflation rate, which excludes government-controlled and volatile food, eased slightly to 2.72 percent in June, from 2.75 percent in May. Bank Indonesia targets inflation at 2.5-4.5 percent this year.

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What this means

The slight deceleration in Indonesia's annual inflation rate to 3.12% is a positive indicator for retail stability, particularly after the monthly CPI increase driven by Ramadan demand. This benign inflation environment suggests consumers retain purchasing capacity, contrasting with the pressures seen in other markets. While companies like Miniso and Tiffany & Co. Are expanding into Indonesia and Singapore, this stable economic backdrop makes the Indonesian market more attractive for further investment. The key will be monitoring core inflation, which eased to 2.72% in June, ensuring it remains within Bank Indonesia's comfort zone, especially as analysts had expected a lower rate. The specific thing to watch next is Bank Indonesia's future inflation forecasts for signs of continued economic stability.

Rajiv Menon · Retail News Asia newsroom

Questions & Answers

Did June’s inflation rate meet Bank Indonesia’s targets?

Yes, June’s annual inflation rate of 3.12 percent remained within Bank Indonesia’s target range. The central bank aims for inflation between 2.5 and 4.5 percent this year.

What was the main reason for the annual inflation rate falling?

The annual inflation rate fell primarily due to the base effect. This refers to the impact of the high prices recorded during last year’s Ramadan period, making the current year's comparison lower.

Why did the consumer price index increase on a monthly basis in June?

The consumer price index rose 0.59 percent month-on-month in June because of increased demand. This surge in demand coincided with the Muslim fasting month.

How did the June annual inflation rate compare with analyst predictions?

The annual inflation rate of 3.12 percent was higher than what analysts had anticipated. Reuters surveyed analysts who had expected a rate of 2.88 percent for June.

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